Lianjian Optoelectronics Media Business was questioned

[Source: "High-tech LED - Research and Review" May issue / reporter Tang Guirong] "The company has about 40% of its customers from the advertising media industry, and now it is necessary to set up its own media company, and hope to expand its downstream business." Recently, for the display The move of the listed company Lianjian Optoelectronics (300269.SZ) to establish a media culture company was interpreted by many insiders as a price reduction in the LED display and competed with the media customers.

On May 16, Lianjian Optoelectronics announced that it plans to establish a joint venture with the natural person Liang Qinyu as a platform with a wholly-owned subsidiary, Shenzhen Linkage Culture Investment Co., Ltd., with a registered capital of 101 million yuan.

It is reported that the main business of Linkage Culture is LED outdoor digital media, that is, Lianjian Optoelectronics is making L ED screens for customers, and the linked culture purchases about 10%-30% of the advertising time of Lian ED's customers. To build a nationwide synchronous broadcast of the outdoor LED media network, the sales of advertising time is profitable. At the same time, it can bring LED display sales to Lianjian Optoelectronics.

Left hand, right hand
“This is a new sales strategy, by bringing advertising business to customers to achieve the purpose of selling display screens.” Wu Xiaogang, general manager of Qipu Optoelectronics, said that through the “advertising screen change” method, Lianjian Optoelectronics can quickly obtain those Display orders for media companies that lack advertising.

The reporter found that Lianjian Optoelectronics is not the first LED display company to set up a media company. In 2002, Liard Optoelectronics invested 1 million yuan to establish Beijing Liard United Advertising Co., Ltd. Since then, Qingsong Technology, another large-scale display company in China, has also established a media company.

But then with the loss of business, some of these media companies have been closed, and some have not actually operated.

Liard Optoelectronics prospectus shows that in 2010, Beijing Liard United Advertising Co., Ltd. total assets of only 132,300 yuan, net assets of -116.25 million; 2010 net profit -188.17 million, 2011 1-6 The net profit for the month was -22,800 yuan.

"What's more terrible is that this kind of left-handed right-handed approach may lead to an isolated situation." The industry insider said that extending to the media industry would result in direct competition with customers for advertising business. In the long run, LED display main business may shrink.

According to a series of detailed terms announced by Lianjian Optoelectronics, Linkage Culture will not separately purchase advertising sites to build screens, only purchase LED display advertising time for some customers of Lianguang Optoelectronics Outdoor Media, and secondly avoid buying positive competition with Phoenix Metropolis Media. Advertising time for LED display.

Relevant data show that in 2011, the domestic LED display outdoor advertising market reached 1.215 billion yuan, an increase of 35.5% over the previous year. In 2012, the LED display outdoor advertising market is expected to reach 1.55 billion yuan, an increase of 27.6%. Relevant agencies predict that by 2015, the outdoor advertising market for domestic LED displays will grow to 2.7 billion yuan.

However, at present, the domestic LED outdoor display advertising market is mainly divided by Phoenix City, Tulip, and Champs. These three companies account for more than 70% of the national market share, leaving only 26.9% for other small and medium-sized peers. .

Lianjian Optoelectronics' 2011 financial report shows that Nanjing Yongda Outdoor Media Co., Ltd. and Phoenix Metropolis Media Co., Ltd. rank among the top five customers, contributing 2.7% and 2.42% respectively last year.

It is understood that Phoenix Media Media Co., Ltd., which was established only five years ago, is a wholly-owned subsidiary of Phoenix Satellite TV. In 2011, LED display advertising revenue accounted for more than 30% of the national market, and it has more than 50 large-scale in 15 cities including Shanghai and Beijing. Outdoor LED display.

"LED display is the main business of Lianjian Optoelectronics. Competing with customers will undoubtedly make the main business path narrower and narrower." The person said that this is why most LED display companies have not developed downstream. the reason.

"Toward the downstream media, more is a sales strategy, in disguise, price cuts, Fudge Media." An industry source said that the establishment of LED display has a construction period, and the advertising time, as well as payment methods are uncertain Sex, advertising is also difficult to cash.

In addition, the involvement in the media business has also presented great challenges to Lianjian Optoelectronics. Interlaced like a mountain, Lianjian Optoelectronics not only lacks the resources of advertisers, but also directly faces competition with its downstream customers.

In order to make up for its shortcomings in the media industry, Linkage Culture introduced the natural person shareholder Liang Qinwei.

According to public information, Liang Qinwei is currently the executive director of the China Advertising Association, the director of the China Advertising Association Newspaper Branch, and the director of the editorial board of the Advertising Magazine. He also has many well-known domestic TV and newspaper industry experience. Liang Qinyi has 20 years of experience in the advertising industry, is familiar with and understands the operation of the advertising media industry, has accumulated more advertiser resources, and serves as a senior consultant for many domestic advertisers.

"Lianjian Optoelectronics may want to bet on the media business to Liang Qinyi." The insiders expressed their doubts. Lianjian Optoelectronics has so many LED displays, but it can only play advertisements on a few screens. It is hard to say whether it still hides more unknown secrets.

Performance pressure
In fact, in the eyes of the industry, Lianjian Optoelectronics chose to launch this model at this point in time, perhaps because the decline in the gross profit of the company's products in the past two years has been difficult to meet the expectations of the secondary market.

The High-Tech LED Industry Research Institute (GLII) reported that the fierce domestic market price wars in the past few years have forced the LED display industry to sacrifice profits to maintain its market share.

"There is no strong channel support, and there is no characteristic segmentation target market. Under the pressure of performance, Lianjian Optoelectronics is very anxious." A securities analyst who has been paying attention to Lianjian Optoelectronics for a long time disclosed to "High-tech LED" The media business is also a helpless move for listed companies to improve their performance.

According to the financial report, the net profit margin of Lianjian Optoelectronics in 2011 was only 10%, which was much lower than that of Alto Electronics, which was nearly 1.2 percentage points lower than that of Liard.

The decline in gross profit forced companies to start looking for new markets.

Lianjian Optoelectronics said that the media business will form a new profit growth point for the company in the future. According to the plan, the project is expected to achieve an annual average sales income of 83 million yuan in the next five years, an annual average net profit of 11.05 million yuan, and a net profit margin of 13.31%.

Shen Yi, deputy general manager of Alto Electronics, said that the return on profits of the investment media industry remains to be seen.

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